Riyad Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, an FCFE cash-flow valuation, relative multiples and the value of retained capital — what is it worth?
Is it cheap or expensive right now?
Latest price vs our fair value. A comparison, not a recommendation.
What it's worth — five lenses
Five independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (SAR) | Weight |
|---|---|---|
| Dividend discount model — primary | 23.62 | 30% |
| Residual income (multi-period build) | 33.24 | 20% |
| FCFE (equity DCF) | 32.18 | 15% |
| Relative multiples | 24.62 | 20% |
| Normalized earnings power | 20.85 | 15% |
| Weighted central fair value | 26.61 | +31.5% vs spot |
The five lenses span SAR 20.9 (the normalized floor, cautious) to SAR 33.2 (the residual-income build, the ceiling), all near or above spot — the dividend model alone (SAR 23.6) already sits above the price. The NIM path through the SAMA easing cycle and whether a ~16% ROE keeps compounding retained capital are the swing factors. Full detail is in the study and the open model.
Technical & price structuretrend, momentum, key levels
Trend, momentum and key levels — what is the price doing now?
What the chart says
In plain terms: Riyad Bank trades meaningfully below our weighted central fair value of SAR 26.61 — the gap is what its retained capital is worth. On the dividend it pays today (~42% of earnings) the shares are worth about SAR 23.6; on the value it builds by reinvesting a ~16% return on equity, the excess-return lenses land at SAR 32.2–33.2. It is Saudi Arabia's third-largest bank by assets — a low-rate, low-cost-deposit franchise earning ~16% on equity against a ~10.3% cost of equity, at a sub-30% cost-to-income ratio. The bull case (~SAR 33) is that the mid-teens ROE persists through the SAMA easing cycle; the cautious case (~SAR 21) is that the margin fades and the ROE settles closer to the cost of equity, which is roughly what the market's ~1.2× book already prices in. What moves it near-term is the SAMA/Fed rate path and the quarterly NIM print.
Key levels
Volatility & where the case breaks
| Typical daily moveRoughly how far the price swings in an average day (based on a measure called ATR). Bigger means choppier. | ~1.0% |
Monte Carlo — where could the price go?near-term price paths
50,000 simulated futures — near-term price paths, independent of the fundamental value.
The 5th–95th and 25th–75th percentile bands from the 50,000-path simulation. Static and pre-computed — independent of the fundamental levers above.
The exact percentiles
The 5th / 25th / middle / 75th / 95th outcomesLine up all 50,000 outcomes low to high — these are the values at the 5%, 25%, 50%, 75% and 95% marks., from 50,000 paths.
| Timeframe | Rare low (5%) | 25% | Middle | 75% | Rare high (95%) |
|---|
What drives the odds
50,000 paths, 16 forces: the SAMA/Fed rate path (the NIM driver), non-oil GDP & Vision 2030 credit demand, oil price & fiscal impulse, sector credit growth, dividend/payout signal, foreign (TASI-inclusion) flows, and momentum/mean-reversion tilt — plus event forces: a quarterly earnings surprise, a SAMA policy surprise, a dividend declaration surprise, a sovereign rating action, a regulatory fee/levy change, a large corporate credit event, an index rebalance, an oil shock, and a geopolitical/regional event. Details in the methodology.
Peer set & risks
Where Riyad Bank sits in its markets
Riyad Bank is Saudi Arabia’s third-largest bank by assets — a mature, low-rate GCC franchise earning ~16% on equity, well above the ~1.2× book the market pays for it. It screens cheaply against Saudi and GCC peers relative to its return. This is a competitive map, not a price table.
| Arena | Riyad Bank's position | Main rivals |
|---|---|---|
| Total assets (Saudi banks) | #3 (~SAR 519bn) | Al Rajhi · SNB · Alinma |
| Return on equity | ~16% (mid-pack) | vs Al Rajhi ~23%, sector ~12–16% |
| Price to book (spot) | ~1.2× (cheap for the ROE) | Al Rajhi ~3.5×, sector ~1.4–1.6× |
| Cost-to-income | ~30% (solid) | Al Rajhi ~23% (best-in-class) |
| Net interest margin | ~2.9% | sector ~2.7–3.0% |
| Capital (common equity/RWA) | ~17.7% (strong) | sector well-capitalised |
The debate is whether the ~1.2× book the market pays already reflects a fading ROE, or whether Riyad Bank keeps compounding at mid-teens — which the excess-return lenses answer yes and the normalized floor more cautiously. Competitive map, not advice.
About this series & how we build these
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Full write-up plus the editable Excel model.
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Edition: 09 Jul 2026. Older editions stay in the Library.